Facts: A borrower defaults on a mortgage secured by a trust deed on an income-producing parcel of real estate, portions of which are unimproved and vacant. The mortgage holder files a judicial foreclosure action and enlists a receiver to control and manage both the rented and unimproved portions of the property. At the foreclosure auction, the mortgage holder submits the highest bid in an amount less than the remaining principal balance and files for a deficiency judgment against the borrower. The mortgage holder possesses the property for several months, managing and maintaining it until the borrower pays the deficiency in full. The borrower then reoccupies the property and subsequently redeems it.
Claim: The borrower seeks a partial refund of the redemption price, claiming the price was improperly calculated since it did not subtract maintenance expenses from the vacant portions of property that did not generate revenue.
Counterclaim: The mortgage holder claims the borrower is not entitled to a partial refund and the redemption price was properly calculated since the vacant portions generated no revenue to offset the maintenance expenses for those portions of the property.
Holding: A California court of appeals holds the mortgage holder’s calculation of the redemption price is proper and the borrower is not entitled to a partial refund since the vacant portions of the property did not generate revenue to offset the maintenance expenses, and thus those expenses are included in the redemption price. [Wells Fargo, N. A. v. 6354 Figarden General Partnership [July 1, 2015) 238 CA4th 370]
